Utah Community Credit Union v. Robertson

2013 UT App 66_________________________________________________________
THE UTAH COURT OF APPEALS
UTAH COMMUNITY CREDIT UNION,
Plaintiff and Appellee,
v.
MIKE L. ROBERTSON SR.,
Defendant and Appellant.
Opinion
No. 20110969‐CA
Filed March 14, 2013
Fourth District, Provo Department
The Honorable James R. Taylor
No. 100402192
Mike L. Robertson Sr., Appellant Pro Se
Paul D. Jarvis, James Hansen, and Jordan K. Rolfe,
Attorneys for Appellee
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion,
in which JUDGES WILLIAM A. THORNE JR.
and STEPHEN L. ROTH concurred.
CHRISTIANSEN, Judge:
¶1 Mike L. Robertson Sr. appeals from the district court’s grant
of summary judgment in favor of Utah Community Credit Union
(UCCU). We reverse and remand.
UCCU v. Robertson
BACKGROUND1
¶2 In April 2009, Robertson, who is self‐employed, completed
an online application for a loan with UCCU in order to purchase
real property in Spanish Fork. Robertson read and signed the loan
application and submitted copies of income statements for 2007
and 2008 in support of his application. He chose to provide these
income statements on an unsigned IRS tax form, specifically Form
1040 U.S. Individual Income Tax. This tax form was not the same
as the one he used as his actual income tax return for those years.
On the income statements he submitted with his loan application,
Robertson represented that his gross adjusted income was $126,168
in 2007 and $109,920 in 2008. For both years, he also submitted an
IRS Schedule A form, which indicated his itemized deductions, and
an IRS Schedule C form, which indicated his profit and loss from
his sole proprietorship business. Pursuant to the loan application,
UCCU could have requested additional documentation from
Robertson, including actual income tax returns because he was a
self‐employed borrower, but UCCU did not do so at any time prior
to closing on the loan.
¶3 At the closing of the loan on May 28, 2009, UCCU presented
Robertson with a page from one of the income statements he had
submitted with his loan application. This page represented
Robertson’s 2008 gross income as $109,920, and Robertson signed
the provided statement because it contained accurate information.
According to Robertson, he advised the UCCU agent that the
information he provided with his application was an income
statement and not a tax form. At that time, UCCU notified Robert‐
son that it would transfer its servicing rights for the loan to Wells
Fargo, effective in July. The parties then executed a Note and a
1
Because this appeal arises from the district court’s grant
of summary judgment in favor of UCCU, we recite the facts in
the light most favorable to Robertson as the nonmoving party.
See Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.
20110969‐CA 2 2013 UT App 66UCCU v. Robertson
Deed of Trust. Paragraph 6 of the Deed of Trust provided that
Robertson would occupy the property as his principal residence
within sixty days “unless extenuating circumstances exist which
are beyond Borrower’s control.” Paragraph 8 of the Deed of Trust
provided that Robertson would default on the loan if “during the
[l]oan application process” he “gave materially false, misleading,
or inaccurate information or statements to [l]ender . . . [i]n connec‐
tion with the [l]oan.” Paragraph 22 of the Deed of Trust provided
for a specific process for the acceleration of the loan following the
borrower’s default, including notice of the breach and the action
required to cure any default.
¶4 After closing on the loan, UCCU attempted to transfer
Robertson’s loan to Wells Fargo for servicing. On June 10, 2009, the
UCCU representative with whom Robertson had worked on his
loan application contacted Robertson and indicated that Wells
Fargo had obtained Robertson’s actual income tax returns from the
IRS. As indicated on those income tax returns, Robertson’s reported
income to the IRS was less than $20,000 for each reported year.
UCCU asked Robertson to account for the discrepancy between the
income he represented in his loan application and the income he
reported to the IRS. Robertson wrote a letter to UCCU, which he
later described as follows:
I wrote a letter regarding [the] income that I earned,
the manner in which I filed my taxes, and the deduc‐
tions that I took to arrive at a taxable income. I
clearly stated that the income that was found on the
one page income statement was in fact true, honest
and accurate.
¶5 In the letter, Robertson also explained that his rationale for
reporting less than his actual income to the IRS was based on
legitimate deductions that Robertson would take from his gross
taxable income. Specifically, Robertson explained that he would
calculate his final income on a long form and then would file his
actual income tax return on a short form, using the same final
20110969‐CA 3 2013 UT App 66UCCU v. Robertson
figure from the long form. By using this practice, Robertson
claimed that he could avoid IRS audits. However, Robertson found
that it was difficult to obtain credit from lenders when utilizing his
income tax returns. As a result, Robertson started using the income
statements to indicate his “true, honest, and accurate” amount of
income. The income statements set forth Robertson’s basic deduc‐
tions but did not indicate the tax writeoffs or the actual annual
income that he reported to the IRS.
¶6 In a June 29, 2009 letter, UCCU advised Robertson that it
was calling his loan because Robertson had provided misleading
income information in the loan application process. Though the
letter was sent to Robertson, the notice did not comport with the
requirements for default contained in paragraph 22 of the Deed of
Trust because it failed to advise Robertson of the steps he could
take to cure his alleged default and failed to provide adequate
notice of the time in which he could cure his alleged default.
Robertson replied to UCCU’s letter, stating that he had complied
with the Note, that he was not in default, and that the amount that
UCCU claimed he owed was incorrect. Robertson continued
making his scheduled payments on the Note. In July 2009, Robert‐
son was due to move into the Spanish Fork house but decided not
to do so because of the stress the communications with UCCU had
created for him. In September, Robertson allowed his daughter and
her family to move into the home in order to maintain it. He
explained, “The communications from [UCCU] began to create
extenuating circumstances that created apprehension and anxieties
in me that maybe I could lose the house that I wanted to move
into,” and “I stopped moving all my stuff from my present house
to the new house. I did not know if I would be able to live there. . . .
[UCCU] created extenuating circumstance[s] that interrupted my
moving into the property and renting my [current other] residence
. . . .”
¶7 On November 9, 2009, UCCU initiated nonjudicial foreclo‐
sure proceedings against Robertson and recorded a notice of
substitution of trustee and a notice of default. In December,
20110969‐CA 4 2013 UT App 66UCCU v. Robertson
Robertson paid the amount then due under the Deed of Trust in
order to cure his alleged default, and he continued making timely
payments on the Note. UCCU never held a trustee sale. On May 24,
2010, UCCU wrote to Robertson and asserted that Robertson was
in default under the Deed of Trust because he misrepresented his
income in the loan application process and because he failed to
occupy the property. This letter provided Robertson with the action
required for curing the alleged default and sufficient notice of the
time in which to cure the alleged default. On May 26, 2010, UCCU
recorded a cancellation of notice of default. In June 2010, UCCU
filed the present action for foreclosure of the trust deed and breach
of contract, among other things.
¶8 Thereafter, UCCU filed a motion for summary judgment. On
December 6, 2010, the district court entered a partial summary
judgment, ruling that there were no disputed issues and that, as a
matter of law, Robertson defaulted under the Deed of Trust by
materially misrepresenting information during the loan application
process and by failing to occupy the property. However, the district
court denied UCCU’s motion for summary judgment as to UCCU’s
request for the entry of a judgment to allow UCCU to sell the
property and to award a deficiency judgment from that sale if
appropriate because UCCU’s June 26, 2009 letter and notice of
default “failed to comply with the [Deed of Trust] requirement for
acceleration of the balance due.” The court granted Robertson’s
motion for leave to file a counterclaim, although it cautioned
Robertson that his some of his claims “may well be rendered moot
by the ruling on summary judgment that he has default[ed] under
the contract” and that some or all of his other claims may have
“specific legal defects.”
¶9 Robertson subsequently filed a counterclaim, asserting the
above‐mentioned claims and six other causes of action. Then, in
February 2011, UCCU filed another motion for summary judgment,
this time providing a more complete record of its compliance with
the notice requirements of the Deed of Trust, including its May 24,
2010 letter. In the same filing, UCCU moved the court to dismiss
20110969‐CA 5 2013 UT App 66UCCU v. Robertson
Robertson’s counterclaims. In a June 1, 2011 memorandum
decision, the district court granted UCCU’s summary judgment,
ruling that Robertson defaulted under the Deed of Trust for the
same reasons it had stated in the previous summary judgment
proceedings, that UCCU properly accelerated the loan pursuant to
the Deed of Trust, and that Robertson failed to cure the default. The
court also dismissed Robertson’s counterclaims. The court awarded
UCCU attorney fees and costs.
¶10 Prior to the court’s June 1, 2011 ruling, Robertson had filed
his own motion for summary judgment arguing, inter alia, that he
had cured the default under the Deed of Trust. The district court
heard argument, and in a ruling from the bench, denied Robert‐
son’s motion and awarded attorney fees and costs to UCCU. On
October 3, 2011, the district court issued a written denial of
Robertson’s motion for summary judgment and confirmed its June
1, 2011 ruling that had granted UCCU’s second motion for
summary judgment and awarded attorney fees and costs to UCCU.
The court also awarded judgment to UCCU in the amount of
$151,384.73. That amount was premised on the principal amount
owing on the loan and interest as of May 24, 2010. Robertson
appeals that order.
ISSUES AND STANDARDS OF REVIEW
¶11 Robertson argues that the district court erred in granting
UCCU’s motion for summary judgment because material issues of
disputed fact exist as to whether he misrepresented information
during the loan application process and whether he failed to
occupy the property due to extenuating circumstances. “Summary
judgment is proper if ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of
law.’” Gudmundson v. Del Ozone, 2010 UT 33, ¶ 44, 232 P.3d 1059(quoting Utah R. Civ. P. 56(c)). In our review of the district court’s
20110969‐CA 6 2013 UT App 66UCCU v. Robertson
grant of summary judgment, “‘we give the court’s legal decisions
no deference, reviewing [them] for correctness, while reviewing the
facts and inferences to be drawn therefrom in the light most
favorable to the nonmoving party.’” See id. (quoting Dairy Prod.
Servs., Inc. v. City of Wellsville, 2000 UT 81, ¶ 15, 13 P.3d 581).2
ANALYSIS
¶12 Robertson argues that the district court erred in awarding
summary judgment in favor of UCCU because there were disputed
issues of material fact regarding how much he owed to UCCU,
whether he misrepresented material information during the loan
application process, and whether he occupied the property.3
I. There Is a Disputed Material Fact as to Whether Robertson
Submitted Misleading Information with His Loan Application.
¶13 In its motion for summary judgment and on appeal, UCCU
contends that Robertson did not dispute that he submitted the
income statements in conjunction with his loan application or that
he asserted in his loan application that he earned more than
$100,000 per year in 2007 and 2008, but that his actual income tax
2
Robertson also challenges the district court’s grant of
summary judgment on the basis that no discovery has occurred.
Because we reverse the court’s grant of summary judgment, we
do not reach this issue.
3
Given our disposition of the other issues on appeal, it is
unnecessary for us to determine whether the court entered the
correct judgment amount. We note, however, that there does
appear to be a discrepancy between the amount UCCU asserted
Robertson owed, as stated in the affidavit attached to UCCU’s
second motion for summary judgment, and the judgment
amount entered by the district court on October 3, 2011.
20110969‐CA 7 2013 UT App 66UCCU v. Robertson
returns that he filed with the IRS indicate that he made less than
$20,000 per year in those two years. UCCU also points out that, in
his own letter to UCCU, Robertson admitted to his practice of
providing lenders with income statements that differed from his
actual tax returns because he believed that UCCU would not
otherwise approve a loan based on the amount of income he
declared on his tax returns.
¶14 In opposition to UCCU’s motion for summary judgment,
and on appeal, Robertson claims that there are genuine issues of
material fact as to whether he materially misrepresented
information during the loan application process. Robertson insists
that the documents he submitted to UCCU in conjunction with his
loan application accurately reflected his annual income because the
tax form he submitted to UCCU was unfiled and unsigned and
thus was not an actual income tax return. He also argues that the
particular documents he submitted to UCCU were not material
because, if they were, UCCU would have requested an actual tax
return before it sold the loan to Wells Fargo. Further, Robertson
asserts that at the closing, he was asked to sign “a single page
income statement that showed that [he] had an adjusted gross
income of $109,920 for 2008.” He indicates that before he signed
this one‐page form, he told the closing agent that “it was an income
statement and not an income tax form.” He contends, “If the forms
are simply an admission of [my] income as [I] portray them to be,
then there is no misrepresentation. They are accurate statements of
income showing that [I] had the necessary income to make the
payments on the loan.”
¶15 The district court agreed with UCCU and ruled that
Robertson was in default under paragraph 8 of the Deed of Trust
because he “gave materially false, misleading, or inaccurate
information or statements to [UCCU] . . . in connection with the
Loan.” The court determined that “[Robertson] knew that the
lenders expected tax returns” because he admitted to adopting the
practice of providing a “different version of tax returns to lenders
20110969‐CA 8 2013 UT App 66UCCU v. Robertson
and the IRS” in order to obtain favorable credit. The district court
explained,
The only possible reason for his use of the complete
set of IRS forms was to mislead the lender to create
the impression that his declaration of income
corresponded to his declaration of income to the
federal government. The uncontroverted evidence in
this case inescapably leads to the conclusion that
Robertson intentionally provided material
misleading information in support of the loan
application in violation of the plain language of the
contract.
¶16 In so ruling, the district court inappropriately weighed the
conflicting evidence in this matter and found that Robertson’s
declarations were not credible. In determining whether to grant
summary judgment, it is inappropriate for the district court to
weigh disputed material facts and make credibility determinations.
See Pigs Gun Club, Inc. v. Sanpete Cnty., 2002 UT 17, ¶ 24, 42 P.3d 379(“A trial court is not authorized to weigh facts in deciding a
summary judgment motion, but is only to determine whether a
dispute of material fact exists.”); Martin v. Lauder, 2010 UT App
216, ¶ 14, 239 P.3d 519 (“[W]eighing credibility and assigning
weight to conflicting evidence is not part of the district court’s role
in determining summary judgment.”).
¶17 In his declaration in response to UCCU’s motion for
summary judgment, Robertson did not deny that he utilized the
unsigned income statements to obtain the loan because on previous
occasions when he submitted an income tax return demonstrating
his “taxable income,” he had not been successful in obtaining
credit. In addition, Robertson states that he told UCCU that the
form he signed at the closing at UCCU’s request was meant to be
only an income statement and not a tax return form. UCCU denies
this.
20110969‐CA 9 2013 UT App 66UCCU v. Robertson
¶18 Robertson alleges that he gave correct, clear, and accurate
information about his actual income, and he swore to a statement
to this effect. Evaluation of these facts in the light most favorable to
Robertson is enough to create a genuine issue of material fact on
this issue. Robertson’s letter and the fact that he provided different
information to the IRS certainly bears on his credibility, but it was
not for the district court to determine whether he intended to
mislead the bank. See Davis v. Sperry, 2012 UT App 278, ¶ 22, 288
P.3d 26 (“‘It is inappropriate for courts to weigh disputed material
facts in ruling on a summary judgment,’ regardless of whether ‘the
evidence on one side may appear to be strong or even compelling.
One sworn statement under oath is all that is needed to dispute the
averments on the other side of the controversy and create an issue
of fact, precluding the entry of summary judgment.’” (quoting
Lucky Seven Rodeo Corp. v. Clark, 755 P.2d 750, 752 (Utah Ct. App.
1988))).
¶19 The facts before the court on summary judgment thus raise
questions that are inappropriate for resolution by the district court
as a matter of law. See Uintah Basin Med. Ctr. v. Hardy, 2008 UT 15,
¶ 19, 179 P.3d 786 (“A district court is precluded from granting
summary judgment ‘if the facts shown by the evidence on a
summary judgment motion support more than one plausible but
conflicting inference on a pivotal issue in the case . . . particularly
if the issue turns on credibility or if the inferences depend upon
subjective feelings or intent.’” (quoting 73 Am. Jur. 2d Summary
Judgment § 46 (2001))). Robertson is the nonmoving party and is
therefore “entitled to the benefit of having the court consider all of
the facts presented, and every inference fairly arising therefrom in
the light most favorable to him.” See id. (citation and internal
quotation marks omitted); see also Pigs Gun Club, 2002 UT 17, ¶ 24.
¶20 Accordingly, we conclude that whether Robertson’s income
information was false, misleading, or inaccurate, and thus, whether
he defaulted under paragraph 8 of the Deed of Trust, are factual
issues for the finder of fact to determine. And, though we recognize
that it would be appropriate for the district court to have granted
20110969‐CA 10 2013 UT App 66UCCU v. Robertson
summary judgment on a factual issue “when reasonable minds
could not differ in concluding” that he breached the Deed of Trust,
see Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 48, 194 P.3d 956, we
cannot say that reasonable minds could not differ here about
whether the income information was false, misleading, or
inaccurate.
II. There Is a Disputed Material Fact as to Whether Robertson’s
Failure To Occupy the Residence Constituted Extenuating
Circumstances Beyond His Control.
¶21 Robertson also argues that there were genuine issues of
material fact concerning whether his failure to occupy the residence
pursuant to paragraph 6 of the Deed of Trust constituted
“extenuating circumstances” beyond his control because of the
stress caused by the uncertainty of UCCU’s communications about
his income.
¶22 Paragraph 6 of the Deed of Trust required Robertson to
occupy the property as his principal residence within sixty days of
the closing of the loan “unless extenuating circumstances exist
which are beyond [Robertson]’s control.” In his declaration,
Robertson asserted that after he received the June 2009 letter from
UCCU’s attorney calling his loan due, he stopped moving all of his
belongings into the Spanish Fork residence. Thus, Robertson does
not deny that he did not reside at that residence but rather argues
that his failure to do so was due to the extenuating circumstances
that arose from the communications with UCCU that had created
“apprehension and anxieties in [him] that maybe [he] could lose
the house that [he] wanted to move into.” UCCU argued that
Robertson created any extenuating circumstances himself and,
thus, such circumstances were within his control. The district court
agreed.
¶23 Like our conclusion that disputed material facts exist as to
whether Robertson provided “materially false, misleading, or
inaccurate information or statements to [UCCU] . . . in connection
20110969‐CA 11 2013 UT App 66UCCU v. Robertson
with the Loan,” the question of whether there were extenuating
circumstances beyond Robertson’s control likewise involves
disputed material facts. Therefore, we conclude that the grant of
summary judgment on the basis that Robertson defaulted when he
failed to occupy the residence was inappropriate.
III. Robertson’s Remaining Arguments
¶24 Robertson also argues that the district court erred in ruling
that he could not cure his alleged default pursuant to Utah Code
section 57‐1‐31 in a judicial foreclosure action. The nonjudicial
foreclosure proceedings undertaken in the first instance by UCCU
ended with UCCU’s cancellation of the notice of default without
any concession that Robertson cured the alleged default.
Thereafter, UCCU filed the present action seeking judicial
intervention to foreclose the trust deed. Compare Utah Code Ann.
§§ 57‐1‐23 to ‐32 (LexisNexis 2010) (dealing with nonjudicial
foreclosures) with §§ 78B‐6‐901 to ‐909 (LexisNexis 2012) (dealing
with mortgage foreclosures and deficiency judgments). Robertson
has not adequately briefed or otherwise persuaded us that his
payment of the amount then due under the Deed of Trust
constitutes a defense to a nonpayment‐related default in a judicial
foreclosure proceeding. Accordingly, we affirm the district court’s
ruling.4
¶25 As to Robertson’s argument that the district court erred
when it dismissed Robertson’s counterclaims without giving him
his “day in court,” we decline to address this argument because
Robertson failed to raise it with the district court after UCCU
moved to dismiss Robertson’s counterclaims. Thus, Robertson
invited the error he claims on appeal. See State v. Winfield, 2006 UT
4Based upon our determination, we need not reach
Robertson’s argument that the district court erred in ruling that
UCCU’s May 24, 2010 default letter provided proper notice
pursuant to paragraph 22 of the Deed of Trust.
20110969‐CA 12 2013 UT App 66UCCU v. Robertson
4, ¶ 14, 128 P.3d 1171 (“[U]nder the doctrine of invited error, we
have declined to engage in even plain error review when ‘counsel,
either by statement or act, affirmatively represented to the [trial]
court that he or she had no objection to the [proceedings].’” (second
and third alterations in original) (quoting State v. Hamilton, 2003 UT
22, ¶ 54, 70 P.3d 111)). Robertson also failed to raise this due
process argument before the district court after it entered its June
1, 2011 memorandum decision dismissing the counterclaims. See
Espinal v. Salt Lake City Bd. of Educ., 797 P.2d 412, 413 (Utah 1990)
(“With limited exceptions, the practice of [the appellate courts] has
been to decline consideration of issues raised for the first time on
appeal.”).
CONCLUSION
¶26 We conclude that the district court erred in granting
summary judgment in favor of UCCU. While we express no
opinion on Robertson’s ultimate ability to convince the factfinder
that he did not mislead UCCU about his income, his declaration
filed in response to UCCU’s motion for summary judgment raises
a genuine issue of material fact concerning his intent to submit the
information he did and concerning whether there were extenuating
circumstances that justified his failure to occupy the residence.
Accordingly, we reverse the summary judgment and remand for
further proceedings.
20110969‐CA 13 2013 UT App 66